Saturday, 07 March 2015

Newbuy scheme launched to back 95% mortgages

A mortgage indemnity scheme to help people buy new homes will be launched today.

Newbuy will help as many as 100,000 buyers obtain a 95 per cent mortgage to buy a new build property.

Under the scheme participating house builders will pay 3.5 per cent of the sale price from their homes into a fund. The government will put in extra support to bring the fund up to 9 per cent of the sale price.

Lenders who are signed up to the scheme will be able to recover funds if a buyer defaults on payments and the value of the property doesn’t cover the mortgage. The house builder’s contribution will be liable first, with the government only forced to step in if this is insufficient.

The scheme was announced in the Laying the foundations housing strategy in November. At the time the government said seven major lenders and around 25 house builders had agreed ‘in principle’ to take part. An update on this is expected later today.

The scheme will boost housing construction and provide 50,000 jobs, representatives from the construction industry have said.

Newbuy has been designed by the Home Builders Federation and the Council of Mortgage Lenders, with support from the government in the form of the guarantee.

Stewart Baseley, executive chairman of the HBF, said: ‘Newbuy will help thousands of people to meet their aspirations to buy a new home, freeing up the housing market and helping first time buyers and those unable to take the next step on the ladder.

‘The scheme will also provide a vital kick-start for house builders large and small who will be able to build the homes and create the jobs that the country desperately needs.’

Readers' comments (13)

  • I thought that the free market worked on the principle of supply and demand? Clearly if you are a friend of the Tories that does not apply. If people can not afford the property and no one wants to buy then you have to drop the price until someone will buy. That’s how capitalist economies work. Why do these free marketeers want to use public money to support a private company?

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  • It is beyond belief that only a short time has passed since the toxic debt through sub prime mortgages and bank collapse and bail outs that the huffing and puffing into an identical bubble is under way. A fundamental difference being this time it is up front tory led with eyes wide open so no excuses when the inevitable happens as the wheel turns.

    However, I retain a degree of sympathy for those desperate for a roof who will almost certainly be sucked into a financial situation they can't maintain. After all the scheme is designed to cater for those who do not have the resources to enter the market with all the protection aimed at the builder and banker.

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  • They areprepared to subsidise home ownership but they won't subsidise Council housing!

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  • Agree with you all - won't this keep prices artificially high? Broader issue is the ongoing assumption that more owner occupation is best, surely wed need a more balanced housing market between rented and ownership!?

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  • Daedalus

    Private renting in this country is not a realistic option for many people.

    In most countries on the continent you can rent your home and stay there for many years. In the UK you are always lookng over your shoulder at the landlord expecting to be given a few months notice to quit, even if you are a perfect tenant.

    I speak from personal experience that this gives an enormous feeling of insecurity, and has significant cost implications of frequent moves.

    In the private sector, if yopu want security, you purchase not rent - no alternative.

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  • Daedalus

    I should have said that my previous post was in response to Techno Dave's comment about a more balanced market between rented and ownership.

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  • It all fits the the tory led coalition. Bring a level of insecurity to tenants and first time buyers and they will "behave" - ie they will be so scared of losing their homes they will not say a word of complaint about landlords or banks... Make a complaint against your boss, and you will lose your job and never work again...
    The tories have made sure that the good british citizens will not dare to riot ever again. for those who haven not understood it yet, the tories have ABSOLUTELY no intention whatsover to resolving the housing crisis or the jobs crisis or any other job. They are never going to do anything to empower citizens to challenge anything, because they moment people will challenge the tories would be kicked out... Posters can whinge and cry foul as much as they like and have been doing, but nothing is going to change, is it?

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  • Jimmy Cricket

    Tenantplus - therefore on the flip side of your argument council/RP tenants can do what they like, when they like and yet still have a tenancy secure in the thought that they can still live in their landlords home. However I have yet to hear of a private tenant who lost his tenancy do to comments about banks and/or landlords.

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  • Daedalus wrote : " In the UK you are always lookng over your shoulder at the landlord expecting to be given a few months notice to quit, even if you are a perfect tenant."

    More Landlord bashing :-(

    If a tenant is looking after a property and paying rent on time. Why would a Landlord want to evict a good tenant?. It is expensive to find new tenants. These are some of the costs involved :
    - letting agency commission (up to 4 weeks + VAT)
    - deposit protection
    - lost rental income (whilst looking for new tenant)
    - council tax (even though empty)
    - water (even though nothing being used)
    - new locks + key cutting
    - refurbishment light or major (to attract new tenant)
    - property improvements e.g. new furniture as needed etc...
    - electricity
    - professional cleaning
    and so on....

    The only time, I have giving notice to quit the property, is when tenants have trashed the property ....

    I like tenants who want to stay a long time.

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  • Concerned Landlord | 12/03/2012 1:44 pm

    You might well like tenants to stay for a long time in your property... HOWEVER nothing will stop you if one morning falling off on the wrong side of your bed you DO decide for WHATEVER reason to get rid of your tenants and issue them with a notice to leave... we are talking about SECURITY of tenure, which means tenants have to be able to sleep at night because they have RIGHTS to some security and not be liable to the moods of their landlords and whether they like them or not... Far from landlords bashing this is about lack of protections tenants on mainlaind Europe have had since WW2... Without a basic security of tenure both for private and social tenants the landlords will always abuse and exploits their tenants fears and lack of choices.

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